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Crocs, Inc. (NASDAQ:CROX), the cult stock behind the cult footwear hit of the same name, is the quintessential fad investment. The stock raced up 400% after its IPO before flaming out spectacularly, going from a peak of around $70 to bottom out at $1 per share.

Investors should have known better after that ugly performance — and anyone who saw the ugly footwear should have understood the ride couldn’t last forever. But after a huge restructuring and rebranding effort, some on Wall Street were again duped into thinking Crocs had hit its stride once more. CROX stock recently regained the $30 mark on this enthusiasm.

But just like everything else in the fashion industry, things changed fast for Crocs. An ugly profit report Monday has prompted panic on Wall Street — and shares of CROX stock opened Tuesday down 36%.

The story of Crocs is a crazy one. CROX stock went public in February 2006 at $30 per share and surged immediately. Crocs split 2-for-1 soon after, then raced up five times over to about $70 per share by October 2007. It was one of those stocks growth guys and momentum investors adored, with revenue and profits both tripling from fiscal 2005 to fiscal 2006.

Of course, it was all a fad. After all, how many brightly colored plastic shoes can one own — unless you’re a rodeo clown?

Overexpansion, slumping sales and a massive inventory of unsold shoes resulted in Crocs firing a third of its employees by the beginning of 2009. The company also made a push into emerging markets and a rebranding to include loafers, boots and other “real” footwear.

The company returned to profitability last year and has notched an impressive six straight quarterly profits and eight straight quarters of improving year-over-year EPS numbers. Revenue is set to top $1 billion this year if estimates hold true, meaning Crocs could turn out better numbers even than it did in fiscal 2007 before the crash.

You can understand why investors were willing to jump back in, and why CROX soared 50% this year while the market struggled to break even.

Unfortunately, after Monday’s ugly earnings report, those rosy estimates are looking less than certain for CROX. The Crocs earnings report after the bell indicated soft sales, lower revenue forecasts and general confirmation that the company could once again be overbought.

The million-dollar question for traders is whether the selloff today will be as severe as (or more severe than) it should be. Some analysts contend Crocs has succeeded in diversifying its offerings and has staying power, particularly in Asia, and its spring line could take the company to the next level in 2012. Others say weak sales at kiosks and outlets, along with broader consumer spending woes in Europe and the U.S., are proof the stock will continue to stumble.

Unfortunately, it might not matter whether the footwear company truly is on the mend. Because for many investors, Crocs already has bit them one too many times.